Invest money

“Lower than prime,” you heard someone say. Like most Canadians, you were probably first skeptical and then confused. We tend to think of the prime lending rate as the invisible “floor” of lending rates. The very best customers can get very close to that floor. It is theoretically possible, we reason, to actually be ON the floor, but not possible to be below it.

Nevertheless, Canadian lenders offer mortgages at prime minus 0.5% to even minus 0.7%. So the floor isn’t the lowest you can go. There’s something under the “floor”. The rate known as “prime” has been the popular benchmark for lending in Canada. When business reporters talk about interest rate movement, they usually talk about what’s happening with prime. But there are other benchmarks in money rates, though they are typically for use by professional money managers. The most significant of these is the Banker’s Acceptance rate.

While “prime” is a set rate which is offered to a lender’s best customers, the Banker’s Acceptance is the rate which financial institutions use to lend money to one another. And it’s typically well below the prime rate. Look for the “Money Rates”section of your favourite newspaper, and you can compare Prime with the Banker’s

Acceptance rates for yourself. “Interesting,” you think, “but why does it matter?” Well, as new lending institutions begin to offer a slate of innovative new loan options, a new mortgage has emerged that is based on the Banker’s Acceptance rate: offering a mortgage rate of 1% over the 3-month Banker’s Acceptance.

If you compared the rock-bottom prime-based variable mortgage rate – prime less 0.5% to 0.7% – with the new adjustable BA-based rate, you would find that the BA-based rate would have delivered significant savings over the past several years, as rates were dropping. There are two reasons for this. Firstly, the BA-based rates have historically been considerably lower than prime. Secondly, the prime rate tends to be “stickier” in an environment where rates are falling. Often, the more fluid, market-based BA rates deliver the rate change more quickly.

Any variable- or adjustable-rate Ontario mortgage is an excellent option when interest rates are either dropping or stable. Not surprisingly, they’ve been a very popular choice in the past few years. There are some rumblings now that rates may begin to increase, but flexible-rate mortgages still remain an excellent choice for those looking to save some interest.

As always, you should consult with a mortgage professional to find the mortgage that suits your personal financial needs. An independent mortgage broker can provide you with information on a broad range of mortgage options from a wide variety of lending institutions, so you can compare features and options at a glance.

And remember, it’s worth taking some time to look beyond prime and explore what’s “under the floor” in mortgage options!

By Ian Sani

In recent years, the cost of living has increased significantly. People are in need of money every now and then. They are trying to raise money from various sources to meet their daily demands. These days you will find many people are opting for loans from companies, banks and other financial institutions. However, majority of the people who have taken the loan find it difficult to repay the loan amount within the specified loan period and this is the reason why people fall into trap of debts.

Debts can cause much damage to an individual and thus it is very important for a person to consider debt management, as this is the only way to debt relief. You will find lot of valuable information on various online guidance services, which specializes in debt relief programs. These services suggest a systematic procedure for you.

You should try to eliminate the debt as soon as possible and then should try to focus on building your future. Make realistic spending plans and this will surely allow you to achieve your goals.

Planning is very important in case of debt relief. You should plan your expenditure in a way that you should be able to secure your present and your future. You should try to balance your life at both the ends.

Dumping your credit cards becomes necessary if you want to get rid of debts. Credit cards enhances your spending capacity and thus, you spend more than your earn. Credit cards no doubt have advantages but it is also true that these encourage people to spend.  If you are not having a credit card then you will only spend up to a certain level and will never overshoot your budget.

At last, develop a habit of saving money wherever you can and learn to prioritize your expenditure.

People always look for profitable investment options to make more money. You can invest your money in different types of investment options. However, it’s essential to invest your money properly. After all, it’s your hard-earned money. There are various viewpoints on how to invest money. This article focuses on a traditional and long term investing approach. It also presents opinions of various experts on how to invest your money correctly.

Go for diversification

When you’re investing your money, it’s essential that you diversify your investments. Don’t invest all your money in one particular domain. Many traditional investment analysts advise to remain diversified. Invest in stocks, cash, bonds and treasuries, real estate, certificates of deposit (CDs) and mutual funds. In an ideal portfolio, your money should be allocated equally among all these types of investments with 20% in each domain.

Invest in cash

Cash is not an outstanding investment but financial consultants typically suggest maintaining minimum 20% of your portfolio in cash. Cash offers you flexibility in the event of security, contingencies, other investments and so on. Some experts even advise having 40% in cash. Try to get the maximum interest rate for your cash.

Certificates of deposit

Many banks and financial institutions offer certificates of deposit. It is a financial product and also known as time deposit. It is insured and comes with a fixed interest rate and fixed term that frequently ranges from 1-5 years. It is more or less similar to a savings account yet the money is not liquid and instantly available. Penalties are applicable for terminating the CD. These are risk-free and stable investments but offer smaller returns as compared to stocks and mutual funds.

Invest in bonds and treasuries

Bonds and treasuries are debt financing instruments of the federal government of the United States and other government agencies. These entities issue them to raise funds for financing projects. These are traditional and secure investments and come with different interest rates and terms.

Invest in real estate

Among all investment options, real estate is one of the most profitable choices. You can gain even from troubled real estate market conditions. If possible, try to invest in commercial real estate. It offers better returns than residential real estate since it has more demand.

Invest in mutual funds

According to some analysts, growth stock mutual funds are possibly the best investment option. In the long run, these funds have around 12% annual growth rate on an average, putting it among the highest returns from long-term investments. Make sure to locate a reliable financial consultant who would help you find the most profitable mutual funds.